5.6.1 The Value of Technology Intermediaries

The need for intermediation to overcome transaction barriers is often discussed
in the context of technology development, both internationally and in purely
domestic contexts. The World Resources Institute (Heaton et al., 1994) has proposed
sector-specific intermediation as an important policy goal for greater international
technology transfer, development and cooperation:

In intermediation, third parties create linkages, transmit knowledge, and expedite
other transactions for the principals. The greater the barriers that separate
parties who could create relationships of mutual benefit, the greater the need
for intermediation. In technology development, the value of intermediation is
well recognised. (p.20)

Evidence to-date with institutions that perform some intermediary functions
shows that sector-specific intermediaries have advantages over broad, general-purpose
intermediaries, because the technologies and applications involved are simply
too diverse. A consequence is that intermediaries for energy efficiency and
renewable energy should to some extent be specialised. In this view, many or
most or the actors are already in existence and working, but communication and
new, and more specific, problem-solving capacities are required.

Others have called technology intermediaries bridging institutions. Dodgson
and Bessant (1996) highlight the importance of the intermediaries that operate
between users and suppliers of technology and which help to create the links
within networks and systems. They say that "bridging institutions...encourage
interaction within the system, assisting with undertaking search, evaluation
and dissemination tasks. They ensure that technological know-how is broadly
dispersed within the system and can provide a compensating mechanism for weaknesses
or 'holes' in the system" (p. 26). Innovation agents are another name for
intermediaries(Dodgson and Bessant, 1996, p.186).

The high value of technology intermediation is illustrated by many of the case
studies presented throughout this report. In the Baltic States, the Swedish
government aid agency NUTEK promoted conversion of heating boilers to biomass
by bringing boiler operators and manufacturers of conversion equipment together,
by providing financing for the conversions, and by providing assistance to boiler
operators in financial and technical analysis, competitive procurement, and
contracting (see Case Study 18). In Mexico, the national
electric utility played an intermediary role by marketing and selling efficient
lighting through its offices, and by reducing the retail price through bulk
procurement (see Section 5.2.1). In East Africa, the promotion
and dissemination of improved efficiency cookstoves was facilitated by small-scale
informal-sector entrepreneurs providing sales and service (see Case
Study 1).

In countries with economies in transition (CEITs), technology intermediaries
are important ways to overcome the lack of business, financing and marketing
skills among firms whose managers never learned these skills in the centrally
planned economy (because these skills were not needed). In particular, energy
service companies, financial intermediaries and information centres have been
playing important technology intermediation roles for climate-friendly technologies
in many CEITs (discussed in more detail in the sections below). In CEITs, because
of generally well developed technical skills among enterprises, intermediaries
can focus on business, information, and financing services (Evans and Legro,
1997; Martinot et al., 1997; Martinot, 1998; Marousek et al.,
1998).

In many rural photovoltaic programmes, a local or foreign intermediary provides
critical marketing activities, education, financing or leasing mechanisms, sales
and service infrastructure that helps to create a market. In the Dominican Republic,
an innovative leasing programme by SOLUZ has successfully transferred PV technology.
In Kenya, a network of dealers, along with education and training programmes
have resulted in 80,000 solar home systems in use (see Case
Study 5). In Bangladesh, the Grameen bank has successfully provided micro-credit
for solar photovoltaic home systems (see Box 5.3).
The World Bank and GEF have recently incorporated innovative intermediary mechanisms
into solar PV home system projects in China, Indonesia, and Argentina, reflecting
the World Bank's increased focus on rural energy for development (World Bank,
1997).

Technology intermediaries also can play an important role in strengthening the
enabling environments for technology transfer discussed in Chapter
4. In particular, they can help to establish codes and standards locally
or nationally, they can help facilitate programmes that create sustainable markets
for environmentally sound technologies, and they can influence regulatory conditions
and macroeconomic policies.